1. Stats as for FY07:
Total Formal Entry Summaries 
Cleveland 1,860,179 
Columbus 126,541 
                             
Total Collections
Cleveland $ 1,393,771,744 Columbus      540,892,820

2. PRIOR DISCLOSURES Per 19 CFR 162.74
Submitting a prior disclosure if you believe that a violation of 19 USC 1592/1593 has occurred

3. Commercial Fraud and Negligence Penalties (19 U.S.C. 1592)
19 U.S.C provides for penalties against any person who:
• by fraud (i.e., voluntarily and intentionally), gross negligence (i.e., with actual knowledge or wanton disregard), or negligence (i.e., fails to exercise reasonable care),

4. • enters or introduces (or attempts to enter or introduce) any merchandise into the commerce of the U.S.,
• by means of any document or electronically transmitted data or information, written or oral statement, or act which is material and false, or any omission which is material (i.e., the falsity has the potential to alter the classification, appraisement, or admissibility of merchandise, or the liability for duty or if it tends to conceal an unfair trade practice under the antidumping, countervailing duty or similar statute, or an unfair act involving patent or copyright infringement).

5. 1592 provides for penalties against the alleged violator at maximum of:
• the domestic value of the merchandise in the case of fraud violations;
• four times the loss of lawful duties, taxes, and fees deprived the government, or the domestic value or, if the violation did not affect the assessment of duties 40% of the dutiable value if the violation did not affect the assessment of duties (but in no case to exceed the domestic value of the merchandise), in the case of gross negligence violations; and
• two times the loss of lawful duties, taxes, and fees deprived the government or 20% of the dutiable value if the violation did not affect the assessment of duties (but in no case to exceed the domestic value of the merchandise), in the case of negligence violations.

6. CBP also may issue duty demand claims, in addition to penalties, for violations of section 19 U.S.C. 1592(a), which have resulted in the loss of lawful duties.
The FPFO issues notice to any person liable for payment of the actual duties (e.g., the violator, the importer or, if unable to pay, the surety).

7. Petitions for relief from section 1592 penalties may be filed
All petitions are filed with the FPFO of the port at which the penalty is assessed.
The FPFO and NSPO decide petitions and supplemental petitions in cases where the penalty claim is less than or equal to $50,000.
OR&R, ITC Division, decides those petitions and supplemental petitions in cases where the penalty claim is greater than $50,000.

8. Customs considers various mitigating and aggravating factors throughout the petition stage.
Mitigating factors include:
contributory CBP error
cooperation with the investigation
immediate remedial action
inexperience in importing
prior good record

9. Extraordinary mitigating factors include:
inability to obtain jurisdiction or to enforce a judgment against the violator
inability to pay the mitigated penalty
extraordinary expenses for the alleged violator
Customs knowledge of the violation.

10. • Aggravating factors include:
obstructing the investigation
withholding evidence
providing misleading information
textile transshipment
prior substantive 1592 violations with a final administrative finding of culpability.

11. • Fraud – 5-8 times to a total duty loss, or 50% to 80% of the dutiable value in non-revenue loss cases, but not to exceed the domestic value of the merchandise;
• Gross negligence – times total duty loss, or 25% to 40% of the dutiable value in non-revenue loss cases, but never to exceed the domestic value of the merchandise; or
• Negligence – times total duty loss or 5% to 20% of the dutiable value in non-revenue loss cases, but never to exceed the domestic value of the merchandise.

12. A person who discloses the circumstances of the section 1592 violation, before or without knowledge of the commencement of a formal investigation (i.e., makes a prior disclosure) can receive substantially reduced penalties.

13. In the case of negligence or gross negligence violations, if there is an actual revenue loss (i.e., loss of duties, taxes or fees after Customs already has liquidated the entries as final), the reduced penalty is the interest from the date of liquidation until the duties are paid.
• In the case of negligence or gross negligence violations, if there is a potential revenue loss (i.e., loss of duties, taxes or fees prior to Customs liquidation of the entries as final), the penalty is remitted.
• In the case of fraud violations, the reduced penalty always equals one times the actual and potential revenue loss (or 10% of the dutiable value, if the violation did not affect the assessment of duties).

14. CBP Will Seize Only When:
the alleged violator is insolvent;
• the alleged violator is beyond the jurisdiction of the U.S.;
• the seizure is essential to protect the revenue; or
• the seizure is essential to prevent the introduction of prohibited or restricted merchandise.

15. Customhouse broker may file a prior disclosure for their client.
Clerical errors would most likely be an issue submitted as a voluntary tender under a PEA. If in doubt, discuss the issue with an import specialist.
If there has not been a violation of 19 USC 1592/1593, then submission of a voluntary tender via PEA (Post Entry Amendment) procedures would be recommended.

16. How do I submit a Prior Disclosure?
standard business letter directed to the Port Director with circumstances of the violation which includes the following:
Identifies the imported merchandise
Identifies the importation by entry number with each concerned port of entry ports where the merchandise and the dates of entry; and any dates of liquidation

17. Specifies the time frame of the violation
Specifies the material false statement, omission or act which explains how the violation occurred. (You may wish to indicate what steps you have taken to prevent the recurrence of this violation.)
Sets forth the true and accurate information that should have been provided in the entry
Tenders the loss of revenue with all taxes and fees

18. Calculates interest due and submits it; the website provides information on how to calculate interest; or CBP will calculate interest and bill you
Submits this disclosure timely; this must be done within 30 days or with an approved extension request.
Sends a copy to all involved ports and your account manager

19. What does this get You?
Reduction of penalties is the primary advantage to your discovery of a violation.
If CBP discovers the violation, the company will be subject to an investigation.
CBP recommends researching past entries no less than 2 years and preferably approximately 5 years from the date of the first violation.

20. CBP may investigate to determine if the prior disclosure included all loss of revenue owed as well as the full circumstances of the violation.
The submission of a prior disclosure does not mean that it is considered a valid prior disclosure.
Penalties may still be assessed if the disclosure does not meet all elements as enumerated under 19 CFR

21. This office reviews the disclosure and determines whether or not it is valid.
Issuance of a prepenalty notice indicates that the disclosure was not determined to be valid.

22. EXAMPLES of some issues that were submitted as prior disclosures:
Misclassification
More than one invoice for the same shipment
Incorrect value
ADD/CVD not paid/entries not filed as a type 03 with ADD/CVD case #
Assists missing (R&D costs, tooling, etc)
Royalties or Commissions unaccounted for

23. EXAMPLES of some issues that were submitted under a voluntary tender:
Transposing numbers
Currency rate
Incorrect country of origin (with no affect on quota or duty rate)
Clerical error when reporting relationship
Incorrect manufacturer reflected on entry documents

24. Usual FPF Procedures:
If you receive a Prepenalty Notice, you have the option of paying the proposed penalty, or filing a response as to why you should not receive a penalty, or why you are entitled to some consideration for a reduced penalty.
Your response should include all facts which have bearing on the issue and/or circumstances you believe would warrant some mitigation.

25. You may receive notice of cancellation, or mitigation of the penalty
You may receive notice of cancellation, or mitigation of the penalty. You have the option of paying the mitigated amount which will close the FP&F case.
If you receive a Penalty Notice, no cancellation was allowed. At that time, you have petitioning rights and may petition with new or additional facts that warrant cancellation or further mitigation of the penalty case.

26. FP&F will consider the facts and determine what action to take
FP&F will consider the facts and determine what action to take. If you receive a letter indicating mitigation was warranted, you have the option of paying the mitigated amount. If no cancellation or mitigation was warranted, you have the option of filing a Supplemental Petition.
Supplemental Petitions are reviewed and considered at the port level and forwarded to the Field Office for decision.